Friday, September 25, 2015

Home Sales Still Considered Healthy Despite A Slow August

Despite the fact that existing home sales slowed in August, they are still considered healthy and they continue to trend in an upward direction.  The existing home sales report came in lower than expected at a 5.31 million annual rate which is the lowest level since April. Additionally July was revised down but remains at an 8-year high at 5.58 million. Existing home sales are 6.2 percent higher than the same time last year.  Although the growth in year-on-year sales is higher, it is currently at the lowest growth rate since February.

Home inventory increased from 4.9 months to 5.2 months.  There continues to be a lack of available homes on the market when you compare it to the same time last year in which inventory was at 5.6 months.

According the FHFA’s house price index home prices cooled off a little bit in the second quarter of this year.  The good news is the latest report shows that home prices began to increase in the month of July when the index rose a greater than expected 0.6 percent.  Prices remain above the same time last year by a spread of 5.8 percent.  This is the largest year-on-year gain since April of last year.

The greatest gains according to the FHFA were in the West then followed by the Mountain region.  There were two regions of the nine that are measured that declined.  New England fell the most by 1.2 percent.  The Mountain region by far has shown the greatest growth since the same time last year with a jump of 9.4 percent. 

New home sales are usually measured in small samples which can lead to significant movement in the data from month to month.  For the month of August the data came in far above expectations at an annual rate of 552,000.  This is the highest rate since February 2008 and it is a significant jump from July’s pace of 537,000.

Some great news for builders is that the recent strength in new homes sales drew down available supply to 4.7 months from 4.9 months.  This has begun to create upward pressure on pricing.  Overall new homes sales are up 22,percent from the same time last year.

With the interest rate decline attributed to the Fed announcement to keep rates where they are, mortgage applications jumped for both refinances and purchases according to the Mortgage Bankers Association.  Purchase apps leaped 9.0 percent and refinances soared by 18.0 percent.

Next week’s market moving reports are:

·        Monday September 28th – Pending Home Sales
·        Tuesday September 29th – S&P Case-Shiller HPI & Consumer Confidence
·        Wednesday September 30th - MBA Mortgage Applications & ADP Employment
·        Thursday October 1st – First Time Jobless Claims & ISM MFG Index
·        Friday October 2nd – National Employment

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Tuesday, September 22, 2015

No Higher Interest Rates Yet

To almost everyone’s surprise the Fed did not move interest rates higher at the conclusion of their two day open market committee meeting on Thursday.  While almost every analyst and investor expected interest rates to be bumped up, the Fed decided against it stating that housing continues to remain a concern.  Raising interest rates could have a negative impact on home sales.

The Fed stated that they feel the recent strength in the economy and the labor markets should translate into a better housing market. To many people’s surprise Janet Yellen, the Fed Chairman in her remarks used the words “remains very depressed” in her description of the housing market.

When speaking with real estate and mortgage professionals, the words the Fed Chairman used seemed to surprise many of them.  However when you dig deeper into the true housing numbers, yes they are better than they have been, but compared to the pre-recession data, the numbers remain low.  Additionally when you see the type of employment growth we have had in 2015, it is somewhat unsettling to see that a minimal part of employment growth is related to housing.

The Fed acknowledged that housing represents a small portion of the economy.  However the housing market does play a much more significant role in consumer and business spending.  The concern of raising rates is that it could impact mortgage rates and slow down housing sales which would have a ripple effect on other business and consumer growth.

What is interesting is that many investors would have expected the announcement to create a rally in the stock market.  For a few moments after the Fed announcement the market jumped 125 points only to end up finishing the day down over 130 points.  The reason given for the market decline is that investors seemed to think that if the Fed is concerned about housing, maybe they should be also.  The good news for homebuyers is that investor concern led to a surge in bond purchases which drove down mortgage rates.

What is interesting is this week is that there were two key housing reports which seemed to send a mixed signal on what is happening.  On Wednesday the Housing Market Index, which reflects builder optimism, showed that sentiment for future construction continues to grow. Traffic at new home sites is up and overall housing inventory remains very low.  This is giving builder’s cause to believe that demand for new construction should continue to grow.  What creates a mixed signal about new construction is that housing starts declined 3.0 percent for the month of August.  Next week there are three key housing reports which will provide further data on the direction and strength of housing.  Stay tuned.

This week’s market moving reports are:

·        Tuesday September 22nd – FHFA House Price Index
·        Wednesday September 23rd – MBA Mortgage Applications
·        Thursday September 24th – New Home Sales & First Time Jobless Claims
·        Friday September 25th – GDP

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Saturday, September 12, 2015

Insanity Subsiding

Stock market insanity seems to have subsided this week.  Although China remains a factor in what can happen in the U.S. economy, it seems that investors have calmed down about it for the moment.  A big focus remains on the Fed and what their next move will be with interest rates.  There has been growing voices from elected officials, foreign governments, to the International Monetary Fund telling the Fed to “please leave interest rates alone”.

The feeling is that many of the world economies are in a very fragile state and raising interest rates, even by a little bit, could have a major impact on world economies and then reverberate back to the U.S.  Although the primary concern of the Fed is the economy in the U.S.  It is not an easy position for the Fed to be sitting in and the latest comments from different Fed members shows that there still is not a consensus on what they should do with rates.

Along with the holiday shortened week there were very few economic reports released.  Mortgage rates are back up a little bit and that as always has an impact on mortgage application activity.  Combine higher rates with the end of the summer and it is the perfect scenario to see a slowdown in loan applications. 

For the week ending September 4th the Mortgage Bankers Association reported that applications for purchases declined by 1.0 percent.  Where the biggest impact was felt is on refinance apps which plummeted 10.0 percent.  In the coming weeks it is likely that the purchase applications should increase as homebuyer return to the market now that the end of the summer activities and vacations are over.

The labor department reported that first time jobless claims continue to remain at a healthy economic number with claims dropping down to 275,000 for the week of September 5th.  Any number below 300K is considered a good report for the job market.  Concern continues to remain regarding the amount of people underemployed and that is one of the factors also weighing on the Fed’s decision to raise interest rates.

Depending on who you listen to it is hard to predict what will happen with housing in the coming months.  Just a few weeks ago Fannie Mae and Freddie Mac both indicated that they believe the housing market is going to get stronger in the fall and moving into next year. 

Zillow on the other hand has reported that confidence in the housing market is declining.  It seems that more and more renters and existing homeowners are beginning to wonder just how much real estate will appreciate in the coming years.  Only time will tell.

The potential market moving reports due out next week are:

·        Tuesday September 15th – Retail Sales and Industrial Production
·        Wednesday September 16th - MBA Applications, Housing Market Index, & CPI
·        Thursday September 17th - First Time Jobless Claims and Housing Starts

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, September 9, 2015

House Hunting? Start Here!


Even if you haven't so much as picked out houses to visit yet, it's important to see your mortgage professional first. Why? What can we do for you if you haven't negotiated a price, and don't know how much you want to borrow?

When we pre-qualify you, we help you determine how much of a monthly mortgage payment you can afford, and how much we can loan you. We do this by considering your income and debts, your employment and residence situations, your available funds for down payment and required reserves, and some other things. It's short and to the point, and we keep the paperwork to a minimum! 

Once you qualify, we give you what's called a Pre-Qualification Letter (your real estate agent might call it a "pre-qual"), which says that we are working with you to find the best loan to meet your needs and that we're confident you'll qualify for a loan for a certain amount.

When you find a house that catches your eye, and you decide to make an offer, being pre-qualified for a mortgage will do a couple of things. First, it lets you know how much you can offer. Your real estate agent will help you decide on an appropriate offer, but being pre-qualified gives you the confidence to know you can follow through.

More importantly, to a home seller, your being pre-qualified is like you walked into their house with a suitcase full of cash to make the deal! They won't have to wonder if they're wasting their time because you'll never qualify for a mortgage to finance the amount you're offering for the home. You have the clout of a buyer ready to make the deal right now!

Saturday, September 5, 2015

Drops And Gains


Five hundred point stock market drops, 300 point gains…it’s amazing what we can get used to.  It seems that in the span of just over a week, investors and consumers have gotten used to the wild swings happening in the markets.  The craziness has been driven by 3 major factors.  Two of which will continue to remain uncertain, and the third we will have an answer too on Thursday September 17th.

Working from certain to uncertain, on September 17th the Fed will announce if they are raising interest rates as planned.  The concern of rising interest rates has investors spooked for the simple reason that no one was counting on all the economic uncertainty from China.  Since China is a huge consumer nation, and the fear that the slowdown may be worse than first thought, many investors are worried about how an interest rate increase at this time can further hurt company profits, especially for those operating in Asia.

The other two factors, China’s economic slowdown and slowing employment in the U.S. are issues that will not be resolved anytime soon.  China’s economic slowdown will impact many major corporations in the U.S. regardless of whether the Fed raises rates or not.

The labor sector in the United Stated seems to be slowing down.  ADP reported that they expect to see only 190,000 jobs added for the month of August.  That is below most analyst’s expectations and has the markets a little on edge.  Although first time jobless claims continue to remain below 300,000, there is a growing sign that hiring is slowing as well.  In fact it appears that hiring is becoming less per month than the first time claims which means that we may be returning to an increasing unemployment number in the coming months.

Although manufacturing has slowed more than expected, which is creating concerns about the economy, the U.S. housing market appears to be gaining strength.  The market is currently the healthiest it has been since the great recession.  Home values appear to be stable if not rising.  Demand for housing is at a healthy pace as well.

Experts and analysts from all over, including Fannie Mae and Freddie Mac, are giving indications that they believe the housing market is going to significantly improve in the fall of 2015 moving right into 2016.  This has many people tied to the real estate and lending markets excited.

Next week there is not much in the way of significant market impacting reports.  With that said, by now we have learned that China, Greece, or almost any other major country in the world can have issues which could impact the U.S. markets.  Stay tuned to see if next week is another market roller coaster.

There potential market moving reports due out next week are:

·        Monday September 7th – Labor Day: All Markets Closed
·        Wednesday September 9th - MBA Applications
·        Thursday September 10th - First Time Jobless Claims
·        Friday September 11th – Producer Price Index

As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate trends.  I welcome the opportunity to serve you in any way I possibly can.  Please feel free to reach me at (707) 455-7070.

Wednesday, September 2, 2015

A Nice Testimonial


"I came back to Big Valley Mortgage for a refi after my original home purchase because I already knew them and trusted them. They go the extra mile to make sure your loan is approved. I mean this with all sincerity. If I went to one of those loan companies that keeps sending me e-mails and are located in some other state, I'm sure they would just submit my loan and tell me 'sorry, you don't qualify, try back in a couple of months and keep paying your credit cards on-time'. Big Valley helps you to qualify, tell you how to fix your credit, make it happen for you. As long as Big Valley is in business, they are my mortgage company" Now go have a great weekend! ~Jeanne and Darrel Brown